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Bulls still in charge


Zinc prices extended their run of 10-year highs into February, with the peak at the time of writing up to $3,595 per tonne.

We had not expected such bullishness given how much supply is coming on stream. But, for now at least, the bulls remain in charge, their resolve strengthened by still-falling LME stocks, a weak dollar, the robust macroeconomic backdrop and good risk-appetite for commodities. Our price forecasts may need another upgrade shortly as our base case cash forecast for the Q1 average stands at $3,350 per tonne and our high-case scenario at $3,500 per tonne. The current chart picture points towards downside risks if $3,600 per tonne is not cleared. However, while the current fundamental situation still looks bullish at the moment, we maintain our view that rising mine supply this year should start to rebalance the refined market by the second half. By then, we should be able to start thinking about calling a stop to this bull market.

Analysis by Andy Cole, Metal Bulletin Research

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